Chapter 10
Budget Deficits in the Short
and Long Run
Blessedaretheyoung,fortheyshallinheritthenationaldebt.
HERBERTHOOVER
Budget Always Balanced? Short Run
Balance
Aggregate supply and aggregate demand
Budget deficits, when
Private demand [C+I+G+(X-IM

An Introduction to Macroeconomics
Microeconomics
How in individual decision making units
No matter how large
Macroeconomics
Behavior of entire economies
No matter how small
Economic aggregates
2
Aggregation
Composition of demand & supply
Combine many indi

Chapter 8
Aggregate Demand and the
Powerful Consumer
Aggregate Demand
Growth of aggregate demand leads to
economic growth economy in turn
booms
Weak aggregate demand leads to
stagnation of the economy.
GDP is the sum of the money values of
all final go